The Indian IT model needs some tweaking to adapt to new market

An interview with S. Mahalingam, Executive Director and Chief Financial Officer, TCS

 

India's largest software services firm Tata Consultancy Services Ltd (TCS) executive director and chief financial officer S. Mahalingam admits that the current slowdown is the worst he has witnessed in his four-decade career in the industry but adds that "nothing is fundamentally flawed with Indian software export services information technology (IT) model; it just needs some tweaking to adapt to the realities of the newer market conditions".

 

Excerpts:

 

Has the IT industry here bottomed out—at least in terms of bad news?

 

This phase of customers either cutting back in spending or in postponing projects got really accentuated since mid-September. The last quarter was tough for everybody. Recovery, I see, is only part of the issue.

 

We are sitting on a decent pipeline. Even the qualified pipeline is pretty healthy. But customers need to get back to discretionary spending to improve processes. That we see as being at least two quarters away.

 

Is the current Indian software services export model broken? Does it need a drastic overhaul?

 

No, nothing is fundamentally flawed with the (Indian software export services IT) model, it just needs some tweaking to adapt to the realities of the newer market conditions. Who does this better will help separate the winners from the losers.

 

We need to do incremental things to improve the model rather than some (dramatic) breakthrough.

 

The current model has a lot of resilience. Business cycles happen all the time as it did, say, in 2001-02. I have never seen tougher times than the current period in my four decades in the industry but then, we were also not this large and didn't get this kind of attention.

 

Remember, this industry has made a lot of profits and more importantly, has constantly reinvested in itself. While we have been generous with shareholders we have reinvested in improving our capabilities… What we need to do now is enhance domain expertise, invest in IP (intellectual property), create frameworks…